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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
THORNBURG MORTGAGE ASSET CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 85-0404134
(State or incorporation or organization) (Employer I.D. Number)
119 EAST MARCY STREET, SUITE 201
SANTE FE, NEW MEXICO 87501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (505) 989-1900
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Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
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SERIES A CUMULATIVE CONVERTIBLE NEW YORK STOCK EXCHANGE
PREFERRED STOCK, PAR VALUE
$.001 PER SHARE
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A(c)(1) please check the
following box [ ].
If this Form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A(c)(2) please check the following box [ ].
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Securities to be registered pursuant to Section 12(g) of the Act:
(Title of class)
NONE
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
A full description of the Registrant's Series A Cumulative Convertible
Preferred Stock, $.001 par value per share, is contained in a Rule 424(b)
Prospectus Supplement filed on January 9, 1997 supplementing the Registrant's
Registration Statement on Form S-3, No. 333-16799, which became effective on
December 13, 1996, which Prospectus Supplement shall be deemed to be
incorporated herein by reference.
ITEM 2. EXHIBITS.
3.1 Articles of Incorporation as amended (incorporated herein by reference
to the Company's Registration Statement on Form S-11 (No. 33-52608 )
dated October 1, 1992).
3.1.1 Amendment to Articles of Incorporation (incorporated herein by
reference to the Company's Quarterly Report on Form 10-Q dated June 30,
1995).
3.1.2 Form of Articles Supplementary.
3.2 Amended and Restated Bylaws (incorporated herein by reference to the
Company's Registration Statement on Form S-8 (No. 33-81112) dated July
1, 1994).
4.1 Form of Certificate for the Series A Cumulative Convertible Preferred
Stock.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Santa Fe, New Mexico, on January , 1997.
THORNBURG MORTGAGE ASSET CORPORATION
By: \s\ Larry Goldstone
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Larry Goldstone, President
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EXHIBIT INDEX
EXHIBIT NUMBER NAME OF EXHIBIT SEQUENTIALLY NUMBERED
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3.1.2 Articles Supplementary 5
4.1 Form of Certificate for the
Series A Cumulative
Convertible Preferred Stock 28
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ARTICLES SUPPLEMENTARY
THORNBURG MORTGAGE ASSET CORPORATION
Series A % CUMULATIVE CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
Thornburg Mortgage Asset Corporation., a Maryland corporation
(hereinafter called the "Corporation"), having its principal office at c/o
Patrick J.D. Donnelly, Suite 1400, 111 S. Calvert Street, Baltimore, Maryland
21202, hereby certifies to the Department of Assessments and Taxation of the
State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article FIFTH (A) of the Charter of the Corporation, the
Board of Directors has duly divided and classified 2,300,000 authorized but
unissued shares of the capital stock of the Corporation into a class designated
as Series A % Cumulative Convertible Preferred Stock and has provided for the
issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Series A % Cumulative Convertible Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 2,300,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Common Stock, par value $.01 per share, from
50,000,000 shares immediately prior to the reclassification to 47,700,000 shares
immediately after the reclassification. The number of shares classified as
Series A % Cumulative Convertible Preferred Stock may be decreased pursuant to
paragraph 6 of Article Third of these Articles Supplementary upon reacquisition
thereof in any manner, or by retirement thereof, by the Corporation.
THIRD: The terms of the Series A % Cumulative Convertible Preferred
Stock (including the preferences, conversions or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. Number of Shares and Designation.
This class of Preferred Stock shall be designated as Series A %
Cumulative Convertible Preferred Stock (the "Series A Preferred Stock") and Two
Million Three Hundred Thousand (2,300,000) shall be the authorized number of
shares of such Series A Preferred Stock constituting such class.
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2. Definitions.
For purposes of the description of the terms of the Series A Preferred
Stock, the following terms shall have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a person means a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the person specified.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Series A
Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Call Date" shall have the meaning set forth in paragraph (b) of
Section 5.
"Series A Preferred Stock" shall have the meaning set forth in Section
1.
"Common Stock" shall mean the common stock, $.01 par value per share,
of the Corporation or such shares of the Corporation's capital stock
into which outstanding shares of Common Stock shall be reclassified.
"Conversion Price" shall mean the conversion price per share of Common
Stock for which each share of Series A Preferred Stock is convertible,
as such Conversion Price may be adjusted pursuant to paragraph (d) of
Section 7. The initial Conversion Price shall be $ (equivalent to an
initial conversion rate of one share of Common Stock for each share of
Preferred Stock).
"Current Market Price" of publicly traded shares of Common Stock of the
Corporation or of any similar security of any other issuer for any day
shall mean the closing price, regular way on such day, on the New York
Stock Exchange ("NYSE").
"Distribution" shall have the meaning set forth in paragraph d(iii) of
Section 7.
"Dividend Payment Date" shall mean, with respect to each Dividend
Period, the tenth (10th) day of January, April, July and October in
each year, commencing with April 10, 1997, with respect to the period
commencing on the Issue Date and ending March 31, 1997; provided,
however, that if any Dividend Payment Date falls on any day other than
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a Business Day, the dividend payment due on such Dividend Payment Date
shall be paid on the Business Day immediately following such Dividend
Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing on
January 1, April 1, July 1, and October 1 of each year and ending on
and including the day preceding the first day of the next succeeding
Dividend Period (other than the initial Dividend Period, which shall
commence on the Issue Date and end on and include March 31, 1997).
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Common Stock during five (5) consecutive Trading
Days selected by the Corporation commencing not more than twenty (20)
Trading Days before, and ending not later than, the earlier of the day
in question and the day before the "ex" date with respect to the
issuance or distribution requiring such computation. The term "ex"
date, when used with respect to any issuance or distribution, means the
first day on which the shares of Common Stock trade regular way,
without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that
day's Current Market Price.
"Incentive Compensation" shall mean the performance-based Incentive
Compensation component of the management compensation payable to
Thornburg Mortgage Advisory Corporation ("the Manager") under the
Management Agreement.
"Issue Date" shall mean January , 1997.
"Junior Stock" shall mean the Common Stock and any other class or
series of Capital Stock of the Corporation over which the shares of
Series A Preferred Stock have preference or priority in the payment of
dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"Management Agreement" shall mean the Management Agreement, as amended,
in effect between the Corporation and the Manager providing for, among
other things, the management and administration of the Corporation by
the Manager.
"NYSE" shall mean the New York Stock Exchange.
"Parity Stock" shall have the meaning set forth in paragraph (a)(i) of
Section 8.
"Person" shall mean any individual, firm, partnership, corporation or
other entity and shall include any successor (by merger or otherwise)
of such entity.
"Press Release" shall have the meaning set forth in paragraph (a)(i) of
Section 5.
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"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Series A
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day", as to any securities, shall mean any day on which such
securities are traded on the NYSE.
"Transaction" shall have the meaning set forth in paragraph (e) of
Section 7.
"Transfer Agent" means State Street Bank & Trust Company, or such other
transfer agent as may be designated by the Board of Directors or their
designee as the transfer agent for the Series A Preferred Stock.
"Voting Preferred Stock" shall have the meaning set forth in Section 9.
3. Dividends.
(a) The holders of Series A Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Series A Preferred Stock equal to the greater of (i) the base
dividend of $ per quarter (the "Base Rate") or (ii) the cash dividends declared
on the number of shares of Common Stock, or portion thereof, into which a share
of Series A Preferred Stock is convertible. The initial Dividend Period shall
commence on the Issue Date and end on March 31, 1997. The dividends payable with
respect to the portion of the initial Dividend Period commencing on the Issue
Date and ending on March 31, 1997, shall be determined solely by reference to
the Base Rate. The amount referred to in clause (ii) of this paragraph (a) with
respect to each succeeding Dividend Period shall be determined as of the
applicable Dividend Payment Date by multiplying the number of shares of Common
Stock, or portion thereof calculated to the fourth decimal point, into which a
share of Series A Preferred Stock would be convertible at the opening of
business on such Dividend Payment Date (based on the Conversion Price then in
effect) by the aggregate cash dividends payable or paid for such Dividend Period
in respect of a share of Common Stock outstanding as of the record date for the
payment of dividends on the Common Stock with respect to such Dividend Period
or, if different, with respect to the most recent quarterly period for which
dividends with respect to the Common Stock have been declared. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend Period
or Periods such dividends shall be declared or there shall be funds of the
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Corporation legally available for the payment of such dividends, and shall
be payable quarterly in arrears on the Dividend Payment Dates, commencing on the
first Dividend Payment Date after the Issue Date. Each such dividend shall be
payable in arrears to the holders of record of the Series A Preferred Stock, as
they appear on the stock records of the Corporation at the close of business on
a record date fixed by the Board of Directors which shall be not more than 60
days prior to the applicable Dividend Payment Date and, within such 60-day
period, shall be the same date as the record date for the regular quarterly
dividend payable with respect to the Common Stock for the Dividend Period to
which such Dividend Payment Date relates (or, if there is no such record date
for such Common Stock, then such date as the Board of Directors may fix).
Accumulated, accrued but unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
Upon a final administrative determination by the Internal Revenue
Service that the Corporation does not qualify as a real estate investment trust
in accordance with Section 856 of the Internal Revenue Code of 1986, as amended
(the "Code"), the Base Rate set forth in (a)(i) will be increased to $ until
such time as the Corporation regains its status as a real estate investment
trust; provided, however, that if the Corporation contests its loss of real
estate investment trust status in Federal Court, following its receipt of an
opinion of nationally recognized tax counsel to the effect that there is a
reasonable basis to contest such loss of status, the Base Rate shall not be
increased during the pendency of such judicial proceeding; provided further,
however, that upon a final judicial determination in Federal Tax Court, Federal
District Court or the Federal Claims Court that the Corporation does not qualify
as a real estate investment trust, the Base Rate, will be increased as stated
above.
(b) The amount of dividends payable per share of Series A
Preferred Stock for the portion of the initial Dividend Period commencing on the
Issue Date and ending and including March 31, 1997, or any other period shorter
than a full Dividend Period, shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Series A Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of cumulative dividends, as herein provided, on the Series A Preferred
Stock. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series A Preferred Stock that
may be in arrears.
(c) So long as any of the shares of Series A Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation,
no Incentive Compensation payments shall be made under the Management Agreement
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued but unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment
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on the Series A Preferred Stock for all Dividend Periods terminating on or prior
to the Dividend Payment Date with respect to such class or series of Parity
Stock. When dividends are not paid in full or a sum sufficient for such payment
is not set apart, as aforesaid, all dividends declared upon the Series A
Preferred Stock and all dividends declared upon any other class or series of
Parity Stock shall be declared ratably in proportion to the respective amounts
of dividends accumulated, accrued but unpaid on the Series A Preferred Stock and
accumulated, accrued but unpaid on such Parity Stock.
(d) So long as any of the shares of Series A Preferred Stock
are outstanding, no dividends (other than dividends or distributions paid in
shares of or options, warrants or rights to subscribe for or purchase shares of
Junior Stock) shall be declared or paid or set apart for payment by the
Corporation, no Incentive Compensation shall be paid under the Management
Agreement, and no other distribution of cash or other property shall be declared
or made directly or indirectly by the Corporation with respect to any shares of
Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or
otherwise acquired (other than a redemption, purchase or other acquisition of
Common Stock made for purposes of any employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) directly or indirectly by the Corporation (except by conversion into
or exchange for Junior Stock), nor shall any other cash or other property
otherwise be paid or distributed to or for the benefit of any holder of shares
of Junior Stock in respect thereof, directly or indirectly, by the Corporation
unless in each case (i) the full cumulative dividends (including all
accumulated, accrued but unpaid dividends) on all outstanding shares of Series A
Preferred Stock and any other Parity Stock of the Corporation shall have been
paid or such dividends have been declared and set apart for payment for all past
Dividend Periods with respect to the Series A Preferred Stock and all past
Dividend Periods with respect to such Parity Stock and (ii) sufficient funds
shall have been paid or set apart for the payment of the full dividend for the
current Dividend Period with respect to the Series A Preferred Stock and the
current Dividend Period with respect to such Parity Stock.
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution of the Corporation (whether capital or surplus) shall be made to or
set apart for the holders of Junior Stock, or any performance-based Incentive
Compensation payments shall be made under the Management Agreement, the holders
of shares of Series A Preferred Stock shall be entitled to receive Dollars ($ )
per share of Series A Preferred Stock (the "Liquidation Preference"), plus an
amount equal to all dividends (whether or not earned or declared) accumulated,
accrued but unpaid thereon to the date of final distribution to such holders,
but such holders shall not be entitled to any further payment. Until the holders
of the Series A Preferred Stock have been paid the Liquidation Preference in
full, plus an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued but unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock, nor shall
any performance-based
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Incentive Compensation payments be made under the Management Agreement, upon the
liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Series A
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series A Preferred Stock and any such other Parity Stock
ratably in the same proportion as the respective amounts that would be payable
on such Series A Preferred Stock and any such other Parity Stock if all amounts
payable thereon were paid in full. For the purposes of this Section (4), (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of any shares of
Parity Stock, upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Series
A Preferred Stock and any Parity Stock, any other series or class or classes of
Junior Stock shall, subject to the respective terms thereof, be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series A Preferred Stock and any Parity Stock shall not be entitled to
share therein.
5. Redemption at the Option of the Corporation.
(a) Shares of Series A Preferred Stock shall not be redeemable
by the Corporation prior to December 31, 1999. On and after December 31, 1999,
the Corporation, at its option, may redeem shares of Series A Preferred Stock,
in whole or from time to time in part, subject to the provisions described
below:
(i) Shares of Series A Preferred Stock may be
redeemed, in whole or in part, at the option of the Corporation, at any time on
or after December 31, 1999 by issuing and delivering to each holder for each
share of Series A Preferred Stock to be redeemed such number of authorized but
previously unissued shares of Common Stock as equals the Liquidation Preference
(excluding any accumulated, accrued but unpaid dividends which are to be paid in
cash as provided below) per share of Series A Preferred Stock divided by the
Conversion Price as in effect as of the opening of business on the Call Date;
provided, however, that the Corporation may redeem shares of Series A Preferred
Stock pursuant to this provision only if for twenty (20) Trading Days, within
any period of thirty (30) consecutive Trading Days, including the last Trading
Day of such 30-day Trading Day period, the Current Market Price of the Common
Stock on each of such 20 Trading Days equals or exceeds the Conversion Price in
effect on such Trading Day. In order to exercise its redemption option pursuant
to this paragraph (a)(i), the Corporation must issue a press release announcing
the redemption (the "Press Release") prior to the opening of business on the
second Trading Day after the condition in the preceding sentence has, from time
to time, been satisfied. The Corporation may not issue a Press Release prior to
November
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30, 1999. The Press Release shall announce the redemption and set forth the
number of shares of Series A Preferred Stock that the Corporation intends to
redeem.
(ii) Shares of Series A Preferred Stock may also be
redeemed, in whole or in part, at the option of the Corporation at any time on
or after December 31, 1999 out of funds legally available therefor at a
redemption price payable in cash equal to $ per share of Series A Preferred
Stock (plus all accumulated, accrued but unpaid dividends as provided below).
(iii) In the event of a redemption pursuant to
Section 5(a)(i), the Corporation shall pay in cash all accumulated, accrued but
unpaid dividends for all Dividend Periods ending prior to the Dividend Period in
which the redemption occurs; but no dividend shall accrue or be payable on the
Series A Preferred Stock to be redeemed for the Dividend Period in which the
redemption occurs unless the Call Date is after the record date for the dividend
payable on the Common Stock for such Dividend Period in which event each holder
of Series A Preferred Stock at the close of business on such dividend record
date shall be entitled to the dividend payable on such shares for the full
Dividend Period on the corresponding Dividend Payment Date notwithstanding the
redemption of such shares prior to such Dividend Payment Date and prior to the
end of the Dividend Period. In the event of a redemption pursuant to Section
5(a)(ii), the Corporation shall pay in cash all accumulated, accrued but unpaid
dividends for all Dividend Periods ending prior to the Dividend Period in which
the redemption occurs, plus the dividend (determined by reference to the Base
Rate if the Call Date precedes the date which the dividend on the Common Stock
is declared for such Dividend Period) accrued from the beginning of the Dividend
Period in which the redemption occurs and ending on the Call Date, provided,
however, that if such Call Date is after the record date for such Dividend
Period, each holder of Series A Preferred Stock at the close of business on such
dividend record date shall be entitled to the dividend payable on such shares
for the full Dividend Period on the corresponding Dividend Payment Date
notwithstanding the redemption of such shares prior to such Dividend Payment
Date and prior to the end of the Dividend Period. Except as provided above, the
Corporation shall make no payment or allowance for accumulated or accrued
dividends on shares of Series A Preferred Stock called for redemption or on the
shares of Common Stock issued upon such redemption.
(b) Shares of Series A Preferred Stock shall be redeemed by
the Corporation on the date specified in the required notice to holders (the
"Call Date"). The Call Date shall be selected by the Corporation, shall be
specified in the notice of redemption and shall be not less than 30 days nor
more than 60 days after the date on which the Corporation issued the Press
Release, if such redemption is pursuant to paragraph (a)(i) of this Section 5,
and (ii) the date notice of redemption is sent by the Corporation, if such
redemption is pursuant to paragraph (a)(ii) of this Section 5.
(c) If full cumulative dividends on all outstanding shares of
Series A Preferred Stock and any other class or series of Parity Stock of the
Corporation have not been paid or declared and set apart for payment, no shares
of Series A Preferred Stock may be redeemed unless
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all outstanding shares of Series A Preferred Stock are simultaneously
redeemed and neither the Corporation nor any affiliate of the Corporation may
purchase or acquire shares of Series A Preferred Stock, otherwise than pursuant
to a purchase or exchange offer made on the same terms to all holders of shares
of Series A Preferred Stock.
(d) If the Corporation shall redeem shares of Series A
Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such
redemption shall be given to each holder of record of the shares to be redeemed
and, if such redemption is pursuant to paragraph (a)(i) of this Section 5, such
notice shall be given not more than ten (10) Business Days after the date on
which the Corporation issues the Press Release. Such notice shall be provided by
first class mail, postage prepaid, at such holder's address as the same appears
on the stock records of the Corporation, or by publication in The Wall Street
Journal or The New York Times, or if neither such newspaper is then being
published, any other daily newspaper of national circulation not less than 30
nor more than 60 days prior to the Call Date. If the Corporation elects to
provide such notice by publication, it shall also promptly mail notice of such
redemption to the holders of the shares of Series A Preferred Stock to be
redeemed. Neither the failure to mail any required notice required by this
paragraph (d), nor any defect therein or in the mailing thereof to any
particular holder, shall affect the sufficiency of the notice or the validity of
the proceedings for redemption with respect to the other holders. Any notice
which was mailed in the manner herein provided shall be conclusively presumed to
have been duly given on the date mailed whether or not the holder receives the
notice. Each mailed or published notice shall state, as appropriate: (1) the
Call Date; (2) the number of shares of Series A Preferred Stock to be redeemed
and, if fewer than all such shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder; (3) whether redemption
will be for shares of Common Stock pursuant to paragraph (a)(i) of this Section
5 or for cash pursuant to paragraph (a)(ii) of this Section 5, and, if
redemption will be for Common Stock, the number of shares of Common Stock to be
issued with respect to each share of Series A Preferred Stock to be redeemed;
(4) the place or places at which certificates for such shares are to be
surrendered for certificates representing shares of Common Stock; and (5) the
then-current Conversion Price. Notice having been published or mailed as
aforesaid, from and after the Call Date (unless the Corporation shall fail to
issue and make available the number of shares of Common Stock and/or amount of
cash necessary to effect such redemption), (i) except as otherwise provided
herein, dividends on the shares of Series A Preferred Stock so called for
redemption shall cease to accumulate or accrue on the shares of Series A
Preferred Stock called for redemption (except that, in the case of a Call Date
after a dividend record date and prior to the related Dividend Payment Date,
holders of Series A Preferred Stock on the dividend record date will be entitled
on such Dividend Payment Date to receive the dividend payable on such shares),
(ii) said shares shall no longer be deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of Series A Preferred Stock of the
Corporation shall cease (except the rights to receive the shares of Common Stock
and/or cash payable upon such redemption, without interest thereon, upon
surrender and endorsement of their certificates if so required and to receive
any dividends payable thereon). The Corporation's obligation to provide shares
of Common Stock and/or cash in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the Call Date, the Corporation shall deposit
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with a bank or trust company (which may be an affiliate of the Corporation) that
has, or is an affiliate of a bank or trust company that has, a capital and
surplus of at least $50,000,000, such number of shares of Common Stock and such
amount of cash as is necessary for such redemption, in trust, with irrevocable
instructions that such shares of Common Stock and/or cash be applied to the
redemption of shares of Series A Preferred Stock so called for redemption. In
the case of any redemption pursuant to paragraph (a)(i) of this Section 5, at
the close of business on the Call Date, each holder of shares of Series A
Preferred Stock to be redeemed (unless the Corporation defaults in the delivery
of the shares of Common Stock or cash payable on such Call Date) shall be deemed
to be the record holder of the number of shares of Common Stock into which such
shares of Series A Preferred Stock are to be converted at a redemption,
regardless of whether such holder has surrendered the certificates representing
the shares of Series A Preferred Stock to be so redeemed. No interest shall
accrue for the benefit of the holders of shares of Series A Preferred Stock to
be redeemed on any cash so set aside by the Corporation. Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the Call Date
shall revert to the general funds of the Corporation, after which reversion the
holders of shares of Series A Preferred Stock so called for redemption shall
look only to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such certificates shall be exchanged for certificates
representing shares of Common Stock and/or any cash (without interest thereon)
for which such shares have been redeemed in accordance with such notice. If
fewer than all the outstanding shares of Series A Preferred Stock are to be
redeemed, shares to be redeemed shall be selected by the Corporation from
outstanding shares of Series A Preferred Stock not previously called for
redemption by lot or, with respect to the number of shares of Series A Preferred
Stock held of record by each holder of such shares, pro rata (as nearly as may
be) or by any other method as may be determined by the Board of Directors in its
discretion to be equitable. If fewer than all the shares of Series A Preferred
Stock represented by any certificate are redeemed, then a new certificate
representing the unredeemed shares shall be issued without cost to the holders
thereof.
(e) In the case of any redemption pursuant to paragraph (a)(i)
of this Section 5, no fractional shares of Common Stock or scrip representing
fractions of shares of Common Stock shall be issued upon redemption of the
shares of Series A Preferred Stock. Instead of any fractional interest in a
share of Common Stock that would otherwise be deliverable upon redemption of
shares of Series A Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash (rounded to the nearest cent) based upon the
Current Market Price of the Common Stock on the Trading Day immediately
preceding the Call Date. If more than one share shall be surrendered for
redemption at one time by the same holder, the number of full shares of Common
Stock issuable upon redemption thereof shall be computed on the basis of the
aggregate number of shares of Series A Preferred Stock so surrendered.
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(f) In the case of any redemption pursuant to paragraph (a)(i)
of this Section 5, the Corporation covenants that any shares of Common Stock
issued upon redemption of shares of Series A Preferred Stock shall be validly
issued, fully paid and non-assessable. The Corporation shall list on the NYSE,
subject to official notice of issuance, the shares of Common Stock required to
be delivered upon any such redemption of shares of Series A Preferred Stock.
The Corporation shall take any action necessary to ensure that any
shares of Common Stock issued upon the redemption of Series A Preferred Stock
are freely transferable and not subject to any resale restrictions under the
Act, or any applicable state securities or blue sky laws (other than any shares
of Common Stock issued upon redemption of any Series A Preferred Stock which are
held by an "affiliate" (as defined in Rule 144 under the Act) of the
Corporation).
The Company will pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of shares of Common
Stock or other securities or property upon redemption of shares of Preferred
Stock pursuant hereto; provided, however, that the Company shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issue or delivery of shares of Common Stock or other securities or property in a
name other than that of the holder of the shares of Preferred Stock to be
redeemed, and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Company the amount of
any such tax or established, to the reasonable satisfaction of the Company, that
such tax has been paid.
6. Stock To Be Retired.
All shares of Series A Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be restored to the status of
authorized, but unissued shares of Common Stock, par value $.01 per share. The
Corporation may also retire any unissued shares of Series A Preferred Stock, and
such shares shall then be restored to the status of authorized but unissued
shares of Common Stock, par value $.01 per share.
7. Conversion.
Holders of shares of Series A Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, a holder of shares of Series A Preferred Stock shall have the right,
at such holder's option, at any time to convert such shares, in whole or in
part, into the number of fully paid and non-assessable shares of authorized but
previously unissued shares of Common Stock per each share of Series A Preferred
Stock obtained by dividing the Liquidation Preference (excluding any
accumulated, accrued but unpaid dividends) per share of Series A Preferred Stock
by the Conversion Price (as in effect at the time and on the date provided for
in the last subparagraph (b) of this Section 7) and by surrendering such shares
to be converted, such surrender to be made in the manner provided
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<PAGE> 12
in paragraph (b) of this Section 7; provided, however, that the right
to convert shares of Series A Preferred Stock called for redemption pursuant to
Section 5 shall terminate at the close of business on the Call Date fixed for
such redemption, unless the Corporation shall default in making payment of
shares of Common Stock and/or cash payable upon such redemption under Section 5.
(b) In order to exercise the conversion right, the holder of
each share of Series A Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof elects to convert such
share of Series A Preferred Stock. Unless the shares issuable on conversion are
to be issued in the same name as the name in which such share of Series A
Preferred Stock is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
Holders of shares of Series A Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for unpaid dividends, whether or
not in arrears, on converted shares or for dividends on the shares of Common
Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for
shares of Series A Preferred Stock as aforesaid, the Corporation shall issue and
shall deliver at such office to such holder, or send on such holder's written
order, a certificate or certificates for the number of full shares of Common
Stock issuable upon the conversion of such shares of Series A Preferred Stock,
and any fractional interest in respect of a share of Common Stock arising upon
such conversion shall be settled as provided in paragraph (c) of this Section 7.
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for shares of
Series A Preferred Stock shall have been surrendered and such notice received by
the Corporation as aforesaid, and the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at such time on such date
unless the stock transfer books of the Corporation shall be closed on that date,
in which event such Person or Persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date on which such shares shall have been
surrendered and such notice
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<PAGE> 13
received by the Corporation. If the dividend record date for the Series A
Preferred Stock and Common Stock do not coincide, and the preceding sentence
does not operate to ensure that a holder of shares of Series A Preferred Stock
whose shares are converted into Common Stock does not receive dividends on both
the shares of Series A Preferred Stock and the Common Stock into which such
shares are converted for the same Dividend Period, then notwithstanding anything
herein to the contrary, it is the intent, and the Transfer Agent is authorized
to ensure that no conversion after the earlier of such record dates will be
accepted until after the latter of such record dates; conversely, if the
dividend record date for the Series A Preferred Stock and the Common Stock do
not coincide, and a holder of shares of Series A Preferred Stock whose shares
are converted into Common Stock would receive a dividend on neither the Series A
Preferred Stock nor the Common Stock for the related Dividend Period, the
Transfer Agent is likewise authorized to defer giving effect to the conversion
until after the latter of such record dates.
(c) No fractional share of Common Stock or scrip representing
fractions of a share of Common Stock shall be issued upon conversion of the
shares of Series A Preferred Stock. Instead of any fractional interest in a
share of Common Stock that would otherwise be deliverable upon the conversion of
shares of Series A Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash based upon the Current Market Price of the Common
Stock on the Trading Date immediately preceding the date of conversion. If more
than one share shall be surrendered for conversion at one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Series A Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to time
as follows:
(i) If the Corporation shall after the Issue Date (A)
pay a dividend or make a distribution on its Capital Stock in shares of Common
Stock, (B) subdivide its outstanding Common Stock into a greater number of
shares, (C) combine its outstanding Common Stock into a smaller number of shares
or (D) issue any shares of Capital Stock by reclassification of its outstanding
Common Stock, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of shareholders entitled to
receive such dividend or distribution or at the opening of business on the day
following the day on which such subdivision, combination or reclassification
becomes effective, as the case may be, shall be adjusted so that the holder of
any share of Series A Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock (or fraction
of a share of Common Stock) that such holder would have owned or have been
entitled to receive after the happening of any of the events described above had
such share of Series A Preferred Stock been converted immediately prior to the
record date in the case of a dividend or distribution or the effective date in
the case of a subdivision, combination or reclassification. An adjustment made
pursuant to this paragraph (d)(i) of Section 7 shall become effective
immediately after the opening of business on the day next following the record
date (except as provided in paragraph 7 below) in the case of a dividend or
distribution and shall become effective immediately after the opening of
business
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<PAGE> 14
on the day next following the effective date in the case of a subdivision,
combination or reclassification.
(ii) If the Corporation shall issue after the Issue
Date rights, options or warrants to all holders of Common Stock entitling them
(for a period expiring within 45 days after the record date described below in
this paragraph (d)(ii) of this Section 7) to subscribe for or purchase Common
Stock at a price per share less than the Fair Market Value per share of the
Common Stock on the record date for the determination of shareholders entitled
to receive such rights, options or warrants, then the Conversion Price in effect
at the opening of business on the day next following such record date shall be
adjusted to equal the price determined by multiplying (A) the Conversion Price
in effect immediately prior to the opening of business on the day following the
date fixed for such determination by (B) a fraction, the numerator of which
shall be the sum of (X) the number of shares of Common Stock outstanding on the
close of business on the date fixed for such determination and (Y) the number of
shares that could be purchased at such Fair Market Value from the aggregate
proceeds to the Corporation from the exercise of such rights, options or
warrants for Common Stock, and the denominator of which shall be the sum of (XX)
the number of shares of Common Stock outstanding on the close of business on the
date fixed for such determination and (YY) the number of additional shares of
Common Stock offered for subscription or purchase pursuant to such rights or
warrants. Such adjustment shall become effective immediately after the opening
of business on the date next following such record date (except as provided in
paragraph h below). In determining whether any rights, options or warrants
entitle the holders of Common Stock to subscribe for or purchase Common Stock at
less than such Fair Market Value, there shall be taken into account any
consideration received by the Corporation upon issuance and upon exercise of
such rights, options or warrants, the value of such consideration, if other than
cash, to be determined in good faith by the Board of Directors.
(iii) If the Corporation shall after the Issue Date
make a distribution on its Common Stock other than in cash or shares of Common
Stock (including any distribution in securities other than rights, options or
warrants as set forth below) (each of the foregoing being referred to herein as
a "distribution"), then the Conversion Price in effect at the opening of
business on the next day following the record date for the determination of
shareholders entitled to receive such distribution shall be adjusted to equal
the price determined by multiplying (A) the Conversion Price in effect
immediately prior to the opening of business on the day following the record
date by (B) a fraction, the numerator of which shall be the difference between
(X) the number of shares of Common Stock outstanding on the close of business on
the record date and (Y) the number of shares determined by dividing (aa) the
aggregate value of the property being distributed by (bb) the Fair Market Value
per share of Common Stock on the record date, and the denominator of which shall
be the number of shares of Common Stock outstanding on the close of business on
the record date. Such adjustment shall become effective immediately after the
opening of business on the day next following such record date (except as
provided below). The value of the property being distributed shall be as
determined in good faith by the Board of Directors. Neither the issuance by the
Corporation of rights, options or warrants to subscribe for or purchase
securities of the Corporation nor the exercise thereof shall be deemed a
distribution
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<PAGE> 15
under this paragraph. Notwithstanding the foregoing provisions of this
paragraph, the Corporation will not make any distribution that, when taken
together with all prior distributions after the Issue Date, would result in an
aggregate adjustment constituting 50% or more of the Conversion Price on the
Issue Date without obtaining prior consent by the affirmative vote of at least
66 2/3% of the votes entitled to be cast by the holders of Series A Preferred
Stock and any other class or series of preferred stock at the time outstanding
that constitutes Parity Stock, voting together as a single class, given in
Person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose.
(iv) No adjustment in the Conversion Price shall be
required unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any adjustments that by
reason of this paragraph (d)(iv)are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made; and
provided, further, that any adjustment shall be required and made in accordance
with the provisions of this Section 7 (other than paragraph (d)(iv)) not later
than such time as may be required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock. Notwithstanding any other
provisions of this Section 7, the Corporation shall not be required to make any
adjustment of the Conversion Price for the issuance of (A) any shares of Common
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of optional
amounts in shares of Common Stock under such plan or (B) any options, rights or
shares of Common Stock pursuant to any stock option, stock purchase or other
stock-based plan maintained by the Corporation. All calculations under this
Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or
to the nearest one-tenth of a share (with .05 of a share being rounded upward),
as the case may be. Anything in this paragraph (d) of this Section 7 to the
contrary notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in addition
to those required by this paragraph (d), as it in its discretion shall determine
to be advisable in order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or warrants to
purchase stock or securities, or a distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its shareholders shall not be
taxable, or if that is not possible, to diminish any income taxes that are
otherwise payable because of such event.
(e) If the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation, statutory share exchange,
issuer or self tender offer for all or a substantial portion of the shares of
Common Stock outstanding, sale of all or substantially all of the Corporation's
assets or recapitalization of the Common Stock, but excluding any transaction as
to which paragraph (d)(i) of this Section 7 applies) (each of the foregoing
being referred to herein as a "Transaction"), in each case as a result of which
shares of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), each
share of Series A Preferred Stock which is not converted into the right to
receive stock, securities or other property in connection with such Transaction
shall thereupon be convertible into the kind and amount of shares of stock,
securities and other property (including
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<PAGE> 16
cash or any combination thereof) receivable upon such consummation by
a holder of that number of shares of Common Stock into which one share of Series
A Preferred Stock was convertible immediately prior to such Transaction. The
Corporation shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph (e), and it
shall not consent or agree to the occurrence of any Transaction until the
Corporation has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series A
Preferred Stock that will contain provisions enabling the holders of the Series
A Preferred Stock that remain outstanding after such Transaction to convert into
the consideration received by holders of Common Stock at the Conversion Price in
effect immediately prior to such Transaction. The provisions of this paragraph
(e) shall similarly apply to successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any
other distribution) on the Common Stock (other than cash dividends and
cash distributions); or
(ii) the Corporation shall authorize the granting to
all holders of the Common Stock of rights or warrants to subscribe for
or purchase any shares of any class or series of capital stock or any
other rights or warrants; or
(iii) there shall be any reclassification of the
outstanding Common Stock or any consolidation or merger to which the
Corporation is a party and for which approval of any shareholders of
the Corporation is required, or a statutory share exchange, or an
issuer or self tender offer by the Corporation for all or a substantial
portion of its outstanding shares of Common Stock (or an amendment
thereto changing the maximum number of shares sought or the amount or
type of consideration being offered therefor) or the sale or transfer
of all or substantially all of the assets of the Corporation as an
entirety; or
(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Series A Preferred Stock at such
holder's address as shown on the stock records of the Corporation, as promptly
as possible, but at least 15 days prior to the applicable date hereinafter
specified, a notice stating (A) the record date for the payment of such
dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other
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<PAGE> 17
property, if any, deliverable upon such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation, dissolution or winding up
or (C) the date on which such tender offer commenced, the date on which such
tender offer is scheduled to expire unless extended, the consideration offered
and the other material terms thereof (or the material terms of any amendment
thereto). Failure to give or receive such notice or any defect therein shall not
affect the legality or validity of the proceedings described in this Section 7.
(g) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with the Transfer Agent an
officer's certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment which
certificate shall be conclusive evidence of the correctness of such adjustment
absent manifest error. Promptly after delivery of such certificate, the
Corporation shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each holder of shares of Series A Preferred Stock at
such holder's last address as shown on the stock records of the Corporation.
(h) In any case in which paragraph (d) of this Section 7
provides that an adjustment shall become effective on the day next following the
record date for an event, the Corporation may defer until the occurrence of such
event (A) issuing to the holder of any share of Series A Preferred Stock
converted after such record date and before the occurrence of such event of the
additional Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock issuable upon
such conversion before giving effect to such adjustment and (B) paying to such
holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of
this Section 7.
(i) There shall be no adjustment of the Conversion Price in
case of the issuance of any Capital Stock of the Corporation in a
reorganization, acquisition or other similar transaction, except as specifically
set forth in this Section 7.
(j) If the Corporation shall take any action affecting the
Common Stock, other than action described in this Section 7, that in the opinion
of the Board of Directors would materially adversely affect the conversion
rights of the holders of Series A Preferred Stock, the Conversion Price for the
Series A Preferred Stock may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time as the Board of Directors, in its sole
discretion, may determine to be equitable under the circumstances.
(k) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Stock solely for the purpose of effecting conversion of the
Series A Preferred Stock, the full number of shares of Common Stock deliverable
upon the conversion of all outstanding shares of Series A Preferred Stock not
theretofore converted into Common Stock. For purposes of this paragraph (k), the
number of shares of Common Stock that shall be deliverable upon the conversion
of all
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<PAGE> 18
outstanding shares of Series A Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single holder (
and without regard to the ownership Limit set forth in the Articles of
Incorporation of the Corporation).
The Corporation covenants that any shares of Common Stock issued upon
conversion of the shares of Series A Preferred Stock shall be validly issued,
fully paid and nonassessable.
The Corporation shall use its best efforts to list the shares of Common
Stock required to be delivered upon conversion of the shares of Series A
Preferred Stock, prior to such delivery, upon the NYSE (subject to notice of
issuance) at the time of such delivery.
The Corporation shall take any action necessary to ensure that any
shares of Common Stock issued upon conversion of shares of Series A Preferred
Stock are freely transferable and not subject to any resale restrictions under
the Act, or any applicable state securities or blue sky laws (other than any
shares of Common Stock which are held by an "affiliate" (as defined in Rule 144
under the Act)).
(l) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Common Stock or other securities or property on conversion or
redemption of shares of Series A Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issue or delivery of shares
of Common Stock or other securities or property in a name other than that of the
holder of the shares of Series A Preferred Stock to be converted or redeemed,
and no such issue or delivery shall be made unless and until the Person
requesting such issue or delivery has paid to the Corporation the amount of any
such tax or established, to the reasonable satisfaction of the Corporation, that
such tax has been paid.
8. Ranking.
Any class or series of Capital Stock of the Corporation shall be deemed
to rank:
(a) prior or senior to the Series A Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Series A Preferred Stock;
(b) on a parity with the Series A Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Series A Preferred Stock, if the holders of such class of stock or
series and the Series A Preferred Stock shall be entitled to the receipt of
dividends and of amounts
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distributable upon liquidation, dissolution or winding up in proportion to their
respective amounts of accrued but unpaid dividends per share or liquidation
preferences, without preference or priority one over the other ("Parity Stock");
and
(c) junior to the Series A Preferred Stock, as to the payment
of dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such stock or series shall be Common Stock or if the holders
of Series A Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of shares of such class or
series ("Junior Stock").
9. Voting.
(a) If and whenever (i) six quarterly dividends (whether or
not consecutive) payable on the Series A Preferred Stock or any series or class
of Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, or (ii) the consolidated shareholders' equity
of the Corporation (determined in accordance with generally accepted accounting
principles which gives effect to any adjustment for the net unrealized gain or
loss on assets available for sale) at the end of any calendar quarter is less
than 150% of the sum of the aggregate Liquidation Preference (excluding any
accumulated, accrued but unpaid dividends) of the then outstanding Series A
Preferred Stock and the aggregate liquidation preference (excluding any
accumulated, accrued but unpaid dividends) of any then outstanding Parity Stock,
the number of directors then constituting the Board of Directors shall be
increased by two (if not already increased by reason of similar types of
provisions with respect to Voting Preferred Stock (as defined below)) and the
holders of shares of Series A Preferred Stock, together with the holders of
shares of every other class or series of Parity Stock (any other such series,
the "Voting Preferred Stock"), voting as a single class regardless of series,
shall be entitled to elect the two additional directors to serve on the Board of
Directors at any annual meeting of shareholders or special meeting held in place
thereof, or at a special meeting of the holders of the Series A Preferred Stock
and the Voting Preferred Stock called as hereinafter provided. Notwithstanding
anything herein to the contrary, if any class or series of Voting Preferred
Stock (with which the Series A Preferred Stock is entitled to vote as a single
class) is entitled to elect two directors as a result of a failure to maintain a
specified level of consolidated shareholders' equity required by the terms of
such Voting Preferred Stock, then when such entitlement is triggered, the
separate entitlement to elect two directors pursuant to Section 9(a)(ii) shall
be suspended. Whenever the entitlement pursuant to Section 9(a)(ii) of the
Series A Preferred Stock (together with holders of Voting Preferred Stock voting
as a single class regardless of series) to vote is suspended as described in the
preceding sentence, the terms of office of all Persons elected as directors
pursuant to Section 9(a)(ii) shall terminate upon the election of the two
directors elected pursuant to a vote of the Series A Preferred Stock and Voting
Preferred Stock voting as a single class as a result of a failure to maintain a
specified level of consolidated shareholders' equity required by the terms of
such class or series of Voting Preferred Stock. Whenever (1) in the case of an
arrearage in dividends described in clause (i), all arrears in dividends on the
Series A Preferred Stock and the Voting
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Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid or declared and set
apart for payment, or (2) in the case of a shortfall in the Corporation's
consolidated shareholders' equity described in clause (ii), the consolidated
shareholders' equity of the Corporation (determined in accordance with generally
accepted accounting principles and giving effect to any adjustment for the net
unrealized gain or loss on assets available for sale) at the end of any
subsequent calendar quarter equals or exceeds 150% of the sum of the aggregate
Liquidation Preference (excluding any accumulated, accrued but unpaid dividends)
of the then outstanding Series A Preferred Stock and the aggregate liquidation
preference (excluding any accumulated, accrued but unpaid dividends) of the then
outstanding Parity Stock, then the right of the holders of the Series A
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors shall cease (but subject always to the same provision for the vesting
of such voting rights in the case of any similar future arrearages in six
quarterly dividends or shortfall in consolidated shareholders' equity), and the
terms of office of all Persons elected as directors by the holders of the Series
A Preferred Stock and the Voting Preferred Stock shall forthwith terminate and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Series A Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of Series A Preferred Stock (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Series A Preferred Stock and of the Voting Preferred Stock for
the election of the two Directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the shareholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Series A Preferred Stock may call such meeting, upon the notice
above provided, and for that purpose shall have access to the stock books of the
Corporation. The Directors elected at any such special meeting shall hold office
until the next annual meeting of the shareholders or special meeting held in
lieu thereof if such office shall not have previously terminated as above
provided. If any vacancy shall occur among the Directors elected by the holders
of the Series A Preferred Stock and the Voting Preferred Stock, a successor
shall be elected by the Board of Directors, upon the nomination of the
then-remaining Director elected by the holders of the Series A Preferred Stock
and the Voting Preferred Stock or the successor of such remaining Director, to
serve until the next annual meeting of the shareholders or special meeting held
in place thereof if such office shall not have previously terminated as provided
above.
(b) So long as any shares of Series A Preferred Stock are
outstanding, in addition to any other vote or consent of shareholders required
by law or by the Articles of Incorporation of the Corporation, as amended, the
affirmative vote of at least 66 2/3% of the votes entitled to be cast by the
holders of the Series A Preferred Stock, given in Person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
20
<PAGE> 21
(i) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary to the Articles of
Incorporation, the Articles of Incorporation or the Bylaws of the
Corporation that materially adversely affects the voting powers, rights
or preferences of the holders of the Series A Preferred Stock;
provided, however, that the amendment of the provisions of the Articles
of Incorporation so as to authorize or create, or to increase the
authorized amount of, any Junior Stock or any shares of any class
ranking on a parity with the Series A Preferred Stock shall not be
deemed to materially adversely affect the voting powers, rights or
preferences of the holders of Series A Preferred Stock; or
(ii) The authorization or creation of, or the
increase in the authorized amount of, any shares of any class or any
security convertible into shares of any class ranking prior or senior
to the Series A Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation or in the
payment of dividends; provided, however, that no such vote of the
holders of Series A Preferred Stock shall be required if, at or prior
to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible
security is to be made, as the case may be, provision is made for the
redemption of all shares of Series A Preferred Stock at the time
outstanding.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Series A Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock shall have the right to vote with the Series A Preferred Stock
as a single class on any matter, then the Series A Preferred Stock and such
other class or series shall have with respect to such matters one (1) vote per $
of the stated Liquidation Preference. Except as otherwise required by applicable
law or as set forth herein, the Series A Preferred Stock shall not have any
relative, participating, optional or other special voting rights and powers
other than as set forth herein, and the consent of the holders thereof shall not
be required for the taking of any corporate action.
10. Record Holders.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Series A Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
21
<PAGE> 22
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its President and witnessed by its
Secretary on January ___, 1997.
WITNESS: THORNBURG MORTGAGE ASSET CORPORATION
/s/ Michael B. Jeffers /s/ Larry A. Goldstone
- ----------------------------- -------------------------------
Michael B. Jeffers, Secretary Larry A. Goldstone, President
THE UNDERSIGNED, President of Thornburg Mortgage Asset Corporation, who
executed on behalf of the Corporation the Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles Supplementary to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Larry A. Goldstone
------------------------------------
Larry A. Goldstone, President
22
<PAGE> 1
[THORNBURG SERIES A____% CUMULATIVE
SEAL] CONVERTIBLE PREFERRED STOCK
_________________
THIS CERTIFICATE SHARES
IS TRANSFERABLE -----------------
IN BOSTON, INCORPORATED UNDER THE LAWS
MASSACHUSETTS OF THE STATE OF MARYLAND
AND NEW YORK,
NEW YORK CUSIP 885218
[PHOTOGRAPH SEE REVERSE FOR IMPORTANT NOTICE
OF FAMILY] ON TRANSFER RESTRICTIONS
AND OTHER INFORMATION
THORNBURG MORTGAGE ASSET CORPORATION
______________________________________________________________________________
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
______________________________________________________________________________
FULLY PAID AND NONASSESSABLE SHARES OF THE SERIES A___% CUMULATIVE
CONVERTIBLE PREFERRED STOCK, $.01 PAR VALUE, OF
CERTIFICATE OF STOCK
Thornburg Mortgage Asset Corporation transferable on the books of the
Corporation by the holder hereof in person or by duly authorized attorney upon
the surrender of this Certificate properly endorsed. This Certificate is not
valid until countersigned by a Transfer Agent and registered by the Registrar.
Witness the facsimile Corporate Seal of this Corporation and the
facsimile signatures of its duly-authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED:
STATE STREET BANK & TRUST COMPANY,
(BOSTON, MASSACHUSETTS)
TRANSFER AGENT AND REGISTRAR
BY
/s/ Michael B. Jeffers
SECRETARY_______________________________
/s/ [illegible]
CHAIRMAN________________________________
AUTHORIZED SIGNATURE
<PAGE> 2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF MAINTAINING THE
CORPORATION'S STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, INCLUDING A RESTRICTION ON OWNERSHIP OF
EQUITY STOCK IN EXCESS OF 9.8% (SUBJECT TO CERTAIN EXCEPTIONS) OF THE
OUTSTANDING EQUITY STOCK OF THE CORPORATION ALL AS SET FORTH IN THE
CORPORATION'S ARTICLES OF INCORPORATION, AS THE SAME MAY BE AMENDED FROM TIME
TO TIME, A COPY OF WHICH WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO
REQUESTS. SUCH REQUEST MAY BE MADE TO THE TRANSFER AGENT OR THE SECRETARY OF
THE CORPORATION.
IN ADDITION, THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER ON REQUEST
AND WITHOUT CHARGE A FULL STATEMENT OR SUMMARY OF THE DESIGNATIONS AND ANY
PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS,
LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS AND TERMS AND CONDITIONS OF
REDEMPTION OF THE STOCK OF EACH CLASS AND SERIES WHICH THE CORPORATION IS
AUTHORIZED TO ISSUE AND THE DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES
BETWEEN THE SHARES OF EACH CLASS AND SERIES, IF ANY, TO THE EXTENT THEY HAVE
BEEN SET, AND OF THE AUTHORITY OF THE BOARD OF DIRECTORS TO SET THE RELATIVE
RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES. SUCH REQUEST MAY BE MADE TO THE
TRANSFER AGENT OR THE SECRETARY OF THE CORPORATION.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR
DESTROYED THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
NOTICE OF ELECTION TO CONVERT FOR
(CONVERTIBLE INTO COMMON STOCK)
The undersigned herby irrevocably elects to convert
CONVERSION
___________________________________________________________shares
of Series A___% Cumulative Convertible Preferred Stock represented USE
by the within certificate into shares of Common Stock of
THORNBURG MORTGAGE ASSET CORPORATION [as such shares may be ONLY
constituted on the conversion date) in accordance with the
provisions of the Articles of Incorporation, as amended, of the
Corporation.
Dated_______________________
_______________________________
Signature
The following abbreviations, when used in the inscription on the face
of this certificate shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- __________Custodian___________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under the Uniform Gifts to Minors
survivorship and not as tenants Act___________________________
in common (State)
UNIF TRF MIN ACT -- ________Custodian(until age_____)
(Cust) (Minor)
________under the Uniform Transfers
(Minor)
to Minors Act___________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- ------------------------------------------------------------------------Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated-----------------------
X----------------------------------------------
X----------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
Signature(s) Guaranteed
By--------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
MEDALLION PROGRAM, PURSUANT TO S.E.C.
RULE 17Ad-15.
- -----------------------------------------------
AMERICAN BANK NOTE COMPANY JAN. 8, 1997 se
3504 ATLANTIC AVENUE
SUITE 12 048255bk
LONG BEACH, CA 90807
(310) 989-2333
(FAX) (310) 428-7459 Proof OW REV. 2
---
- -----------------------------------------------
